To what kind of world will we recover?
Delve into seven world-shaping megatrends, analyse the data that defines them, and plot their potential impact on individual industries.
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by UBS
The content in this infographic was relevant when it was published on 18 June 2020.
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Global trade has seen a secular shift away from goods and commodities towards services since the turn of the millennium. But since the pandemic, the move from the material to the intangible has gained pace.
Technology has forged ahead while both human and institutional ways of working have adapted, and UBS believes neither of these changes will be reversed. Intellectual property and technology have been the two fastest-growing areas in investment.1
E-commerce has accelerated with Covid-19, and consumer habits learned during shutdowns are unlikely to disappear after the pandemic.
Share of e-commerce in total retail sales in major countries
Korea
China
UK
Singapore
US
Canada
35%
30%
25%
20%
15%
10%
5%
0%
2014
2015
2016
2017
2018
2019
2020
Korea
China
UK
Singapore
US
Canada
Source: Haver, UBS. Note: US and Canada data is to March 2020; Korea, China, Singapore, UK data is to April 2020.
Moreover, there is still plenty of room for e-commerce to grow, with UBS Global Research suggesting the segments that will likely grow strongest are those that were hitherto underpenetrated, such as household products, groceries, personal care and home improvement.2
Which categories will grow e-commerce sales? - UBS Retail e-commerce interactive model
-10%
0%
10%
20%
30%
40%
50%
Household products
Grocery
Personal care
Bath bedding
Autoparts
Home improvements
Pet supplies
Sporting goods
Other
Toys
Clothing and shoes
Electronic
Overall
E-commerce
Stores
Source: UBS Evidence Lab - High e-commerce growth scenario
In the short term, a slowing economy may delay 5G rollouts, but the impact of Covid-19 should boost demand for fast and reliable connectivity over the medium term.
The speed and the spread of 5G will help the parallel proliferation of the Internet of Things (IoT), bolstering other technologies.3
Similarly, working from home is an accelerator. The trend predated the pandemic and is likely to comfortably outlive it.4
UBS believes that some form of flexible working will become the norm, contributing to keeping demand high for software, other IT services, media and entertainment, and hardware.
Per-capita GDP (PPP) vs proportion of jobs that can be done from home
Afghanistan
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50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
GDP per capita (purchasing power parity)
Share of jobs that can be done at home
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
AFG
ARE
AUT
BEL
BGD
BGR
BIH
BLZ
BOL
BRA
CHE
CHL
CIV
CYP
CZE
DEU
DNK
DOM
ECU
EGY
ESP
EST
FIN
FJI
FRA
UK
GEO
GHA
GRC
GTM
GUY
HND
HRV
HUN
IRL
ISL
ITA
KGZ
KHM
KIR
LAO
LBR
LKA
LTU
LUX
LVA
MDG
MDV
MEX
MKD
MLT
MMR
MNE
MNG
MOZ
MUS
NER
NLD
NOR
NPL
PAK
PAN
PHL
PLW
POL
PRT
ROU
RUS
RWA
SLE
SLV
SRB
SVK
SVN
SWE
SWZ
SYC
TGO
THA
TON
TUR
UGA
URY
USA
WSM
ZMB
Source: Dingel, J.I., & Niman ,B. (2020). How many jobs can be done at home? (No.w26948). National Bureau of Economic Research (https://www.nber.org/papers/w26948), UBS. Note: The chart excludes Luxembourg
Sectors in focus
The shift from offline to online commerce will likely accelerate, particularly for historically underpenetrated e-commerce categories and demographics such as luxury and the elderly.
Expedited migration to online shopping could impact the General Retail sector, forcing stores to close in order to maintain equilibrium.
Accelerating growth of e-commerce would reduce retailer demand for physical stores, impacting Real Estate.
Sources:
1. Haver, UBS, Breakdown of US investment – IP and info processing equipment have driven growth
2. Urbis, ABRASCE, ICSC, Japan Council of shopping centres, Cabinet Office, Government of Japan, Statista 2016. Note: Where data on ratios of shopping centre sales to retail sales is unavailable, we use shipping centre area to total area as a proxy. Based on the countries where both sets of data are available, this is considered a reasonable proxy
3. UBS, How will 5G networks change communication?
4. Working from home predates the coronavirus crisis: the proportion of the US labour force working from home rose from 0.7% in 1980 to roughly 3.0% before the pandemic, with a major acceleration in this proportion having started in 2005.
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